|Publication type:||Working paper – expertise – study|
|Title:||Debt-sensitive majority rules|
|Authors:||Becker, Johannes Gerd|
|Series:||CEPR Discussion Paper|
|Publisher / Ed. Institution:||Centre for Economic Policy Research|
|Publisher / Ed. Institution:||London|
|Subjects:||Public Good; Debt restriction; Debt-sensitive majority rule; Fiscal policy; Public debt; Simple majority rule; Voting|
|Subject (DDC):||330: Economics|
|Abstract:||We examine debt-sensitive majority rules. According to such a rule, the higher a planned public debt, the higher the parliamentary majority required to approve it. In a two-period model we compare debt-sensitive majority rules with the simple majority rule when individuals differ regarding their benefits from public-good provision. We establish the existence of Condorcet winners under debt-sensitive majority rules and derive their properties. We find that equilibrium debt-levels are lower under the debt-sensitive majority rule if preferences regarding public goods are sufficiently heterogeneous and if the impact of debt on future public-good provision is sufficiently strong. We illustrate how debt-sensitive majority rules act as political stabilizers in the event of negative macroeconomic shocks.|
|License (according to publishing contract):||Licence according to publishing contract|
|Departement:||School of Management and Law|
|Organisational Unit:||Institute for Risk & Insurance (IRI)|
|Appears in collections:||Publikationen School of Management and Law|
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